Tuesday, June 3, 2008

The Chump Phase

For the next few posts, I'd like to focus attention on the challenges that reslient communities (RCs) will face in the coming years as we transition through the Great Collapse of the current economic model and build up a new one. I am trying to puzzle through ways that RCs might avoid being totally crushed by the legacy system during the transition phase. Lot's of great work is out there on the potential benefits and positive aspects of RCs, but not so much work is being done on how such communities move from "odd bunch of geeks and hippies in scattered areas" to "broad social movement with potential to overturn portions of the consumer economy." We talked a bit about this issue in The Marrano Option, but I'd like to flesh out the problem in general terms.

Here is where my train of thought is headed:

The Transition
If we do see the kinds of economic and social dislocation I expect in the coming months, we should then see a lot of RC variants spring up to deal with the problems. In some areas of the country it might involve guerrilla farming, bandos occupying houses that were foreclosed on, small-scale energy production fueled creatively (wind, stolen diesel, methane, etc. - I'll ignore my favority option - small-scale nuke for this discussion, that will be for areas that have access to capital, engineering talent and social stability). Other versions might include de-urbanizing, moving to small towns and, by force of circumstance, turning to subsistence farming - a sort of genteel poverty redux, but with a host of significant problems.

Urban areas will be interesting to watch. Some will succeed, I believe, but it will take significant changes on how they generate and use energy and on how they feed their populace. The day of the mega-city is limited, I think...

The Assumptions
This collapse and transition period I am expecting is based on some assumptions such as
  • A significant downturn in social mood which affects how the masses in society respond to incentives and events (i.e. whereas in a period of positive mood a disaster might be a spur to great engineering works or scientific solutions to problems, in a period of negative mood the majority will turn to blamestorming, magical thinking and abandonment of the affected area)
  • Petroleum prices that remain high and rising. Depletion continues to hollow out the new mega-projects that come on-stream. Oil prices per barrel have one more good drop in them, I think, maybe even down into the $70s, briefly, due to demand destruction and a wave of new supply, but my assumption is that petroleum will be very dear in the coming decades
  • Agricultural product prices for crops that are farmed on a mass scale (corn, cotton, soybeans, etc.) will be very volatile due to energy inputs, changing government subsidies, water problems in some areas and an aging demographic among farmers. This will drive a return to Victory Gardens and local allotment farming, in my opinion
  • Significant disruption of federal social programs. I've beaten this horse to death on more than one occasion, but just a reminder - the Baby Boomers are retiring. The Welfare State won't be able to survive that.
  • Disruptive technologies will continue to change how work is done. Many will not be able to adapt and I believe a large, world-wide underclass will form. An underclass dedicated to agriculture and local industry, while a global elite will work and live in a whole different economic sphere. I use the term "underclass" but in reality, it could easily turn out to be a lifestyle that returns dignity and meaning to the work and social lives of millions across the United States.
  • Stuff I haven't thought of. If this truly is one of those rare transition periods in history, we'll be living and making history with every choice and decision. Who knows what flavors of blowback we'll see?
The Chump Phase

What any potential "solutions" to a crashed system have in common is that the active and strong personalities that will be faced with rules suited to the legacy system that by then will have ceased to have a future. We will be in the "Chump Phase" - where the majority of people are still hard-wired to believe in the legacy system and all the attendant laws, regulations and law enforcement techniques. They will be played for chumps - work hard for a corporation, spend lot's on credit cards, don't rock the boat, keep up with the Joneses, buy that big house in the exurbs and oh yeah, by the way, the Man has re-jiggered the bankruptcy laws to make you a debt slave when the economy doesn't allow the majority of workers to grow their income enough to keep up with their debts. All these social and economic norms that we've been taught for the last few decades will only lead those who adhere to them down a blind alley.

At the same time, there will be a wide variety of behaviors that don't match up well with the legacy system laws. To succeed in this new world, you must adopt new habits, but in adopting new habits, you might get your ass tossed in prison for a variety of property rights violations, drug law infractions and who knows what sorts of affronts to social norms (i.e., polygamy or group "marriages" to build up capital and provide for defense of property and aid in raising children, seizing vacant land to grow food, economic activities that violate current law such as operating bot networks as part of a GlobalGuerrilla "tribe" or growing dope, not paying property taxes, etc.).

It will be a time that you must be nimble and adaptive, but the legacy system will still have tremendous power to hobble you and cage your creativity. It will prove interesting.


For What It's Worth

FYI for those of you who are intersted in Elliott Wave analysis. The June issue of the Elliott Wave Financial Forecast has an outstanding Special Section called "The Fundamental Tipping Point" which gives a fantastic historical comparison between the current economic situation and past turning points. There's a great chart that compares balance sheet items at previous turning points in the stock market. Very interesting, especially for folks who are leery of technical analysis and prefer more "fundamental" reasons for their equity analytics. If you don't want to buy a subscription, I think can buy a single issue - if it interests you.

And, on the Peak Oil front, be sure to check out this new analysis from Jeffrey Brown over at The Oil Drum - Is a Net Oil Export Hurricane Hitting the US Gulf Coast? It continues to hammer home the importance of the Export Land Model and its relevance to our precarious situation here in the U.S. as a petroleum importer.

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